Total revenues decreased 87.4% to $6.4 million for the third quarter of 2016, compared with $50.5 million for the same period of 2015;

Electric vehicle ("EV") parts sales decreased 90.4% to $4.7 million for the third quarter of 2016, compared with $49.0 million in the same period of 2015;

Kandi Electric Vehicles Group Co., Ltd. (the "JV Company") sold 184 units of EV products, including 159 EV products via the Micro Public Transportation (MPT) program and 25 EV products via its direct sales program, a 96.9% decrease compared to the same period last year;

GAAP net loss for the third quarter of 2016 was $0.6 million, or $0.01 per fully-diluted share, compared with GAAP net income of $2.3 million, or $0.05 per fully-diluted share in the same period of 2015;

Non-GAAP adjusted net loss1, which excludes stock award expenses and changes in the fair value of financial derivatives, was $1.8 million in the third quarter of 2016, compared with non-GAAP adjusted net income of $6.3 million of the same period of 2015. Non-GAAP adjusted loss per share1 was approximately $0.04 per fully-diluted share for the third quarter of 2016 compared with Non-GAAP adjusted earnings per share of $0.13 per fully-diluted share for the same quarter of 2015; and

Working capital surplus was $65.5 million as of September 30, 2016. Cash, cash equivalents and restricted cash totaled $17.9 million as of September 30, 2016.

"China's central government preceded a review on the subsidies paid to all the EV manufacturers, which caused the 2015 subsidy payments remain unpaid industry-wide. The delay in subsidy payment heavily impacted the JV Company's production and sales, which resulted in a significant decrease in our EV parts sales." commented Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi. "Although our financial performance this year has not matched up to our past success, we have accomplished lots of fundamental work for the business growth in year 2017. First, with the subsidy review in year 2016, after our positive communication with the government, we believe there will be a good outcome soon. There is some misunderstanding with the EV battery exchange model adopted by our end customers to repeatedly and efficiently utilize batteries for the EVs that we manufactured during 2013 and 2014, which was also a challenge to the Company's further development. Taking the opportunity for clarification with government during the subsidy review, we can clear up this barrier and create a good base for future smooth development. Second, the process of preparing the JV Company to enter into capital markets at the appropriate time and with a strong valuation is on the track as planned; At the same time, we have done lots of work for the JV Company to obtain the vehicles manufacturing license approval in 2017. Finally, we will introduce two new EV models in 2017. Our new models, carefully designed to best serve market needs, will provide a solid foundation for the fast growth in 2017. In addition, in this quarter, we made a significant progress into developing the country-wide EVs distribution network for direct sales. We have also signed the strategic agreement with Qingdao TELD New Energy Co. Ltd. for the Shandong market, and a strategic cooperation agreement with Shanxi Coal Asset Management Group for the Shanxi market, both of which paid us the initial payments in connection with both agreements."

"Although the central government will begin reducing the amount of renewable energy subsidies to all EV manufacturers in 2017, the subsidy program itself will continue through 2020. Under the government's current subsidy policy, we believes the EVs produced and sold by the JV Company meet national renewable energy subsidy requirements and are eligible to receive subsidy payments. Kandi is currently developing the EV products after year 2020, which do not rely solely on subsidy payments and is identifying key areas of focus in which to ensure Kandi's sustained growth and improve Kandi's earnings capabilities," Mr. Hu concluded.

"Due to the delayed government subsidy payments, we have experienced decreased cash flow in the third quarter of 2016, which inevitably impacted the Company's financial performance in this quarter," added Mr. Wang Cheng (Henry), Chief Financial Officer of Kandi. "We expect our cash flow and financial position will be improved in the coming quarters once the central government concludes its review and resumes its subsidy payments."

Net Revenues and Gross Profit

3Q16

2Q16

3Q15

Q-o-Q%

Y-o-Y%

Net Revenues (US$mln)

$

6.4

$

55.2

$

50.5

-88.5

%

-87.4

%

Gross Profit (US$mln)

$

0.7

$

8.5

$

7.1

-92.3

%

-90.9

%

Gross Margin

10.2

%

15.3

%

14.1

%

-

-

Net revenues for the third quarter of 2016 decreased 87.4% compared to the same quarter last year. This decrease in net revenues was mainly due to a decrease in EV parts sales. Gross margin was 10.2%, 3.9% lower compared to 14.1% for the same quarter of 2015, which was the result of significant volume drops.

Operating Income (Loss)

3Q16

2Q16

3Q15

Q-o-Q%

Y-o-Y%

Operating Expenses (US$mln)

$

1.3

$

10.8

$

9.6

-88.3

%

-86.7

%

Operating Income (Loss) (US$mln)

($

0.6

)

($

2.4

)

($

2.4

)

-

-

Operating Margin

-9.7

%

-4.3

%

-4.8

%

-

-

Operating Income (Loss) (US$mln) (Non-GAAP)

($

1.8

)

$

5.9

$

4.6

-

-

Total operating expenses in the third quarter of 2016 were $1.3 million, compared with $9.6 million in the same quarter of 2015. The decrease in total operating expenses was due to a decrease in stock compensation expenses, which were an expense reversal of $1.2 million in this quarter, compared with the stock compensation expenses of $7.0 million in the same quarter last year. Excluding stock compensation expenses, operating expenses in the third quarter of 2016 were $2.5 million, the same in the same quarter last year.

GAAP Net Income

3Q16

2Q16

3Q15

Net Income (Loss) (US$mln)

($

0.6

)

$

2.8

$

2.3

Earnings (Loss) per Weighted Average Common Share

($

0.01

)

$

0.06

$

0.05

Earnings (Loss) per Weighted Average Diluted Share

($

0.01

)

$

0.06

$

0.05

Stock award expenses (expense reversal)

($

1.2

)

$

8.3

$

7.0

Change of the fair value of financial derivatives

($

0.0

)

($

0.5

)

($

3.0

)

Non-GAAP net income (loss) from continuing operations

($

1.8

)

$

10.5

$

6.3

Net loss was $0.6 million in the third quarter of 2016, compared with $2.3 million of net income in the same quarter of 2015. Net income was affected by significant decreases in sales, offsetting this quarter's decreased stock reward expenses due to weak financial performance.

Non-GAAP net loss was $1.8 million, a decrease of $8.1 million in the third quarter of 2016 compared to $6.3 million of non-GAAP net income in the same quarter of 2015. The decrease in Non-GAAP net income was mainly due to the decrease in revenue in this quarter.

In the third quarter of 2016, the JV Company sold 184 EV products, a decrease of 96.9% compared to 6,004 EV products sold in the same quarter of 2015.

The condensed financial income statement of JV Company for the third quarter of 2016 is below:

3Q16

2Q16

3Q15

Q-o-Q%

Y-o-Y%

Net Revenues (US$mln)

$

11.7

$

111.8

$

98.4

-89.5

%

-88.1

%

Gross Profit (US$mln)

$

5.9

$

14.7

$

13.3

-59.5

%

-55.4

%

Gross Margin

50.8

%

13.1

%

13.5

%

-

-

Net Income (Loss)

($

0.4

)

$

8.6

$

1.6

-

-

% of Net revenue

-3.7

%

7.7

%

1.6

%

-

-

Revenue for the JV Company was $11.7 million in the third quarter of 2016, a decrease of 88.1% compared to the same quarter of 2015. Net loss was $0.4 million, a decrease of $2.0 compared to $1.6 million of net income in the same quarter of 2015.

Kandi's investments in the JV Company are accounted for using the equity method of accounting because Kandi has a 50% ownership interest in the JV Company. As a result, Kandi recorded 50% of the JV Company's net loss or $0.2 million for this quarter. After eliminating intra-entity profits and losses, Kandi's share of the after-tax loss of the JV Company was $0.3 million for the third quarter of 2016.

Outlook

For the fourth quarter of 2016, Kandi expects net revenues to be in the range of $28 million to $30 million.

The Company also expects the JV Company to deliver 2,000 to 2,200 EV products in the fourth quarter.

This outlook reflects the current view of the management, which is subject to change.

Third Quarter of 2016 Conference Call Details

The Company has scheduled a conference call and live webcast to discuss the Q3 2016 financial results at 8:00 AM (Eastern time) ) (9:00 P.M. Beijing Time) on November 9, 2016. Mr. Hu Xiaoming, Chief Executive Officer of the Company, and Mr. Wang Cheng (Henry), Chief Financial Officer of the Company, will deliver prepared remarks, to be followed by a question and answer session.

The live audio webcast of the call can also be accessed by visiting Kandi's investor relations website at http://en.kandivehicle.com. An archive of the webcast will be available on the Company's website following the live call.

About Kandi Technologies Group, Inc.

Kandi Technologies Group, Inc. (KNDI), headquartered in Jinhua, Zhejiang Province, is engaged in the research and development, manufacturing and sales of various vehicle products. Kandi has established itself as one of China's leading manufacturers of pure electric vehicle ("EV") products (through its joint venture), EV parts and off-road vehicles. More information can be viewed at the Company's corporate website at http://www.kandivehicle.com. The Company routinely posts important information on its website.

Safe Harbor Statement

This press release contains certain statements that may include "forward-looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risk factors discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on the SEC's website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risk factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

Follow us on Twitter: @ Kandi_Group

- Tables Below -

KANDI TECHNOLOGIES GROUP, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 30, 2016

December 31, 2015

Current assets

Cash and cash equivalents

$

3,689,850

$

16,738,559

Restricted cash

14,240,615

16,172,009

Short term investment

-

1,613,727

Accounts receivable

40,805,693

8,136,421

Inventories (net of provision for slow moving inventory of $472,910 and $485,901 as of September 30, 2016 and December 31, 2015, respectively

15,519,976

17,773,679

Notes receivable

1,969,252

13,033,315

Other receivables

3,243,391

332,922

Prepayments and prepaid expense

746,748

181,534

Due from employees

33,817

34,434

Advances to suppliers

30,759,354

71,794

Amount due from JV Company, net

114,763,704

76,172,471

Amount due from related party

10,916,700

40,606,162

TOTAL CURRENT ASSETS

236,689,100

190,867,027

LONG-TERM ASSETS

Property, Plant and equipment, net

16,690,437

20,525,126

Land use rights, net

12,342,904

12,935,121

Construction in progress

57,094,373

54,368,753

Long Term Investment

1,424,062

1,463,182

Investment in JV Company

87,721,955

90,337,899

Goodwill

322,591

322,591

Intangible assets

433,735

495,306

Other long term assets

8,914,927

154,019

TOTAL Long-Term Assets

184,944,984

180,601,997

TOTAL ASSETS

$

421,634,084

$

371,469,024

CURRENT LIABILITIES

Accounts payables

$

111,682,048

$

73,957,969

Other payables and accrued expenses

4,399,221

9,544,909

Short-term loans

35,676,489

36,656,553

Customer deposits

78,097

94,026

Notes payable

3,093,511

3,850,478

Income tax payable

1,142,678

624,276

Due to employees

26,954

9,423

Deferred taxes liabilities

87,387

2,374,924

Financial derivate - liability

-

3,823,590

Deferred income

14,990,122

13,726

Total Current Liabilities

171,176,507

130,949,874

LONG-TERM LIABILITIES

Deferred taxes liabilities

1,284,335

1,593,582

Total Long-Term Liabilities

1,284,335

1,593,582

TOTAL LIABILITIES

172,460,842

132,543,456

STOCKHOLDER'S EQUITY

Common stock, $0.001 par value; 100,000,000 shares authorized; 47,699,638 and 46,964,855 shares issued and outstanding at September 30,2016 and December 31,2015, respectively

47,030

46,965

Additional paid-in capital

226,929,764

212,564,334

Retained earnings (the restricted portion is $4,172,324 and $4,172,324 at September 30,2016 and December 31,2015, respectively)

33,371,578

31,055,919

Accumulated other comprehensive income(loss)

(11,175,130

)

(4,741,650

)

TOTAL STOCKHOLDERS' EQUITY

249,173,242

238,925,568

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

421,634,084

$

371,469,024

KANDI TECHNOLOGIES GROUP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND

COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

2016

2015

2016

2015

REVENUES, NET

$

6,366,380

$

50,528,545

$

112,241,641

$

142,273,091

COST OF GOODS SOLD

5,715,211

43,411,839

96,417,337

122,294,189

GROSS PROFIT

651,169

7,116,706

15,824,304

19,978,902

OPERATING EXPENSES:

Research and development

522,806

785,450

1,222,967

1,928,091

Selling and marketing

374,102

122,873

1,150,880

312,284

General and administrative

373,411

8,649,541

18,031,487

16,275,202

Total Operating Expenses

1,270,319

9,557,864

20,405,334

18,515,577

INCOME(LOSS) FROM OPERATIONS

(619,150

)

(2,441,158

)

(4,581,030

)

1,463,325

OTHER INCOME(EXPENSE):

Interest income

832,031

1,140,756

2,397,364

2,454,079

Interest expense

(425,152

)

(534,987

)

(1,299,549

)

(1,730,898

)

Change in fair value of financial instruments

10,692

3,049,242

3,823,590

11,802,586

Government grants

594,323

(724

)

2,292,180

92,139

Share of profit (loss) after tax of JV

(299,538

)

1,179,605

(203,375

)

1,900,128

Other income (expense), net

(106,299

)

988,224

202,878

1,094,278

Total other income, net

606,057

5,822,116

7,213,088

15,612,312

INCOME (LOSS) BEFORE INCOME TAXES

(13,093

)

3,380,958

2,632,058

17,075,637

INCOME TAX (EXPENSE)

(552,848

)

(1,037,763

)

(316,399

)

(3,175,287

)

NET INCOME (LOSS)

(565,941

)

2,343,195

2,315,659

13,900,350

OTHER COMPREHENSIVE INCOME(LOSS)

Foreign currency translation

(805,216

)

(7,098,249

)

(6,433,480

)

(6,157,006

)

COMPREHENSIVE INCOME(LOSS)

$

(1,371,157

)

$

(4,755,054

)

$

(4,117,821

)

$

7,743,344

WEIGHTED AVERAGE SHARES OUTSTANDING BASIC

47,695,290

46,959,638

47,436,418

46,670,533

WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED

47,695,290

46,959,638

47,436,418

46,945,277

NET INCOME (LOSS) PER SHARE, BASIC

$

(0.01

)

$

0.05

$

0.05

$

0.30

NET INCOME (LOSS) PER SHARE, DILUTED

$

(0.01

)

$

0.05

$

0.05

$

0.30

KANDI TECHNOLOGIES GROUP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine Months Ended

September 30, 2016

September 30, 2015

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

2,315,659

$

13,900,350

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

3,681,345

4,388,902

Deferred taxes

(2,608,702

)

(1,854,863

)

Change in fair value of financial instruments

(3,823,590

)

(11,802,586

)

Share of profit after tax of JV Company

203,375

(1,900,128

)

Stock compensation cost

13,930,829

12,486,881

Changes in operating assets and liabilities, net of effects ofacquisition:

(Increase) Decrease In:

Accounts receivable

(33,335,798

)

(19,286,512

)

Inventories

1,802,780

(17,289,849

)

Other receivables and other assets

(11,868,318

)

(298,976

)

Due from employee

17,718

(10,535

)

Prepayments and prepaid expenses

(31,684,685

)

6,265,899

Amount due from JV Company

(41,182,480

)

(27,964,497

)

Due from related party

28,994,314

-

Increase (Decrease) In:

Accounts payable

40,240,135

44,980,746

Other payables and accrued liabilities

10,415,706

(1,302,135

)

Customer deposits

(13,598

)

(2,502,087

)

Income Tax payable

607,422

1,062,643

Net cash used in operating activities

$

(22,307,888

)

$

(1,126,747

)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of plant and equipment, net

(39,250

)

(408,850

)

Purchases of construction in progress

(4,236,301

)

(39,054

)

Issuance of notes receivable

(51,553,604

)

(72,040,444

)

Repayment of notes receivable

62,415,498

61,697,894

Long Term Investment

-

(1,535,651

)

Short Term Investment

1,592,024

-

Net cash provided by (used in) investing activities

$

8,178,367

$

(12,326,105

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Restricted cash

1,519,477

(3,232,950

)

Proceeds from short-term bank loans

-

30,583,709

Repayments of short-term bank loans

-

(27,512,406

)

Proceeds from notes payable

5,187,040

9,860,498

Repayment of notes payable

(5,849,988

)

(12,299,436

)

Warrant exercise

434,666

-

Net cash provided by (used in) financing activities

$

1,291,195

$

(2,600,585

)

NET INCREASE IN CASH AND CASH EQUIVALENTS

(12,838,326

)

(16,053,437

)

Effect of exchange rate changes on cash

(210,383

)

1,365,000

Cash and cash equivalents at beginning of year

16,738,559

26,379,460

CASH AND CASH EQUIVALENTS AT END OF PERIOD

3,689,850

11,691,023

SUPPLEMENTARY CASH FLOW INFORMATION

Income taxes paid

2,322,747

1,794,115

Interest paid

1,283,843

1,718,257

1Non-GAAP measures, including the Non-GAAP net income and Non-GAAP EPS, are defined as the financial measures excluding the change of the fair value of financial derivatives and the effects of stock award expense. We supply non-GAAP information because we believe it allows our investors to obtain a clearer understanding of our operations. Any non-GAAP measures should not be considered as a substitute for, and should only be read in conjunction with, measures of financial performance prepared in accordance with GAAP.